Your earlier assertion that too much processing time is required to avoid cloth/hair clipping is also false. The easiest CPU-wise (but most work intensive) way to get cloth and hair not to clip is to animate them along with the character per frame, of course, like Xrd, but that doesn't get the physics benefits. If you build decent collision primitives and have a good simulation of your nodes, though, you can certainly do it for sims. We did it in SWBF2 on the PS2, for example - I know cuz I helped write the code. :^P
ESPECIALLY in a fighting game where there are only two characters on screen, most of this stuff is fixable. It's just a question of whether one cares.